Brazil’s Braskem reduces ethylene production by 45%

SAO PAULO (ICIS news)--Brazil’s Braskem has temporarily reduced its ethylene production capacity by 45% to lower inventory levels amid weaker global demand, a company official said on Thursday.

Braskem’s total ethylene capacity is 2.5m tonnes/year, according to the company.

“Some 25% of our net revenues come from exports, and those have been strongly hit since October,” Braskem corporate relations vice-president Marcelo Lyra said in Portuguese.

Braskem suspended one of its two ethylene production lines at the 1.2m tonnes/year Triunfo petrochemicals complex in southern ?xml:namespace>Brazil, Lyra said.

The company halted production on 23 November at one of the two ethylene lines at its 1.3m tonnes/year Camacari site in the state of Bahia.

Lower output levels will be maintained until year-end, Lyra said, when the Brazilian producer plans to reevaluate market trends for demand and stocks.

“We will not lay off any workers with the idling of those production lines,” Lyra said.

Lyra added that the cut will affect Braskem’s polyethylene (PE) and polypropylene (PP) production capacities as well. The company said it expects a PP and PE production cutback of about 20% in the fourth quarter of 2008.

Braskem will reduce investments for 2009 to about R 1bn ($410m) from around reais (R) 1.3bn ($542m) in 2008, Lyra said.

According to a report by Sao Paulo-based consulting firm MB Associados, domestic output and investment reductions are expected for 2008 and 2009 with a strong slowdown in investments and exports.